Two alternatives are being considered for recovering aluminum from garbage. The first has a capital cost of $100,000, a first year maintenance cost of $15,000, with maintenance increasing by $500 per year for each year after the first. The second has a capital cost of $120,000, a first-year maintenance cost of $3000, with maintenance increasing by $1,000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2,000 per year for each year after the first. Life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 10%. Using present worth analysis, determine which alternative is preferred.

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Answer Alternative 1 NPW 100000 ... View the full answer